Dream of home ownership getting out of reach

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Development charges making home ownership unaffordable and overpriced, warns OREA

Ontarians generally disagree with the notion that “growth pays for growth,” particularly when it comes to the high costs associated with funding new housing infrastructure via development charges, polling from the Ontario Real Estate Association (OREA) reveals.

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The findings contained in a new report conducted by Abacus Data has found that “prohibitive costs, like municipal development charges are pushing the dream of home ownership even further out of reach for Ontarians.”

Of those polled, while 71 per cent say their ultimate goal to is to own a home, the fact it is both “unaffordable and “overpriced” means the chance of that happening are slim.

“Home ownership is a milestone that many Ontarians aspire towards,” said OREA president Rick Kedzior. “Unfortunately, prohibitive costs like development charges are being tacked onto the price tag and pushing affordability further out of reach.”

“That’s why, since 2019, OREA has been lobbying the provincial government to look at ways to reduce development charges and make homeownership more affordable.”

Based on a survey of 2,000 Ontario residents 18 and older and conducted last year in early December, authors of the report note that “aspiring homeowners face a significant hurdle in saving for a home.”

According to a release issued by OREA, despite lower interest rates and cooling inflation, homeownership continues to be perceived as expensive, unaffordable and overpriced.

Kedzior said that his organization has “realized that development charges have been out of control for a while now in terms of municipalities using them as a cash cow.”

The majority of the province’s 444 municipalities, he added, implement development charges and it is just passed on to the consumer from the builder.”

When it comes to the so-called “growth pays for growth” concept, the survey indicated that the majority of those surveyed disagree with the notion with 75 per cent saying they “strongly support reducing municipal development charges” and 72 per cent in favour of the provincial government setting limits.

The Open Council, a web site that makes it easier for someone to follow the goings-on of municipal councils across Ontario, describes it “as a slogan often repeated by municipal members of council in Ontario and used to justify (development charges).”

It is, it states, a “guiding principle indicating an intent to make buyers of new homes pay for the cost of expanding municipal services to their location, rather than making existing homeowners (and voter base) pay for it through increased property taxes and user fees.”

As an organization, OREA has submitted several recommendations to the Ford government designed, it said, to “streamline the building of much needed-homes and bring affordability back, without passing costs down to consumers.”

These include:

· Ending exclusionary zoning province-wide so more homes can be built.

· Allowing water and wastewater services to be provided by municipal services corporations and amortized across the customer base, instead of using development charges.

· Intensifying density along transit lines by embracing commercial to residential conversions, saving Ontarians time and money commuting.

“We need to break down the barriers preventing Ontarians from entering the housing market by eliminating unnecessary red tape and costs that drive up home prices and slow down the entire homebuilding process,” said Kedzior.

“Implementing pro-homeownership policies that both address the infrastructure needs of municipalities and encourage homebuilding are how we can help solve the housing crisis.”